FinCEN Delays AML Rule for Investment Advisers Until 2028

On Monday, July 21, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) announced a two-year postponement to the effective date of a new anti-money laundering rule for investment advisers. Originally set to go into effect on January 1, 2026, the rule will now be postponed to January 1, 2028. 

The rule, known as the Anti-Money Laundering/Countering the Financing of Terrorism Program and Suspicious Activity Report Filing Requirements for Registered Investment Advisers and Exempt Reporting Advisers, or IA AML Rule, was issued by FinCEN on August 28, 2024. It was designed to safeguard investment advisers from illicit finance activity, including misuse by criminals, foreign adversaries, and other money laundering and terrorist financing threats. The final rule would require many Registered Investment Advisers (RIAs) and Exempt Reporting Advisers (ERAs) to implement formal anti-money laundering (AML) and counter-terrorism financing (CFT) programs, and to begin filing Suspicious Activity Reports (SARs) with FinCEN. These requirements would bring RIAs and ERAs in line with other financial institutions regulated under the Bank Secrecy Act (BSA). 

The IA AML Rule was issued after the U.S. Treasury identified risks of illicit finance in the investment adviser sector. A February 2024 risk assessment highlighted numerous cases in which sanctioned persons, corrupt officials, fraudsters, and other criminals exploited the investment adviser industry to access the U.S. financial system and launder funds. It also found that foreign states had gained access to certain technologies through investments in early-stage companies, raising national security concerns.  

In addition to postponing the effective date,  FinCEN also noted that it plans to revisit the scope of the IA AML Rule. It is unclear at this point whether the IA AML Rule will ever be implemented, and what form it will take. 

While the future of the IA AML Rule is uncertain, it signals the government's continued focus on transparency and risk mitigation in private markets. Investment advisers, including RIAs and ERAs, should continue to review all of their AML/CFT obligations and adjust their program once any changes are announced.  

We will continue to track developments and share updates as more clarity emerges. In the meantime, Sydecar continues to strengthen its legal and compliance capabilities to support our customers.